Senegal is located in the western most part of Africa’s Sahel region and has a national territory spanning 196,722 km². The country is divided into 14 regions, 113 municipalities, 370 rural communities, and 14,400 villages. Its population is estimated at 12.8 million and consists of over 20 ethnic groups.
Senegal is one of the most stable countries in Africa, and has considerably strengthened its democratic institutions since its independence in 1960. Senegal has had four presidents: the first, Leopold Sedar Senghor, governed from 1960 to 1980 and handed over power peacefully to Abdou Diouf. In 2000, Senegal witnessed the first truly contested election which resulted in a victory for Abdoulaye Wade’s Senegalese Democratic Party (PDS) and a democratic political transition from the traditional Socialist Party (PS) of Abdou Diouf.
In the 2012 elections, Macky Sall, former prime minister of Senegal, challenged the incumbent President Abdoulaye Wade and won the run-off election with 65.8% of the vote. The 2012 elections were the first to feature two female candidates, and were characterized by a high degree of transparency and universal acceptance of the results. Although deadly protests preceded the first round of voting, the electoral process was peaceful and resulted in Senegal’s second democratic transition.
Poverty remains high and the gross domestic product (GDP) growth remains well below the rates necessary for significant poverty reduction. A continued dependence on remittances to fuel domestic demand and a growing reliance on capital-intensive exports in compensation for faltering labor-intensive sectors results in few new job creation opportunities. The economy has suffered from the global slowdown, commodity price shocks, and instability in neighboring countries; all of which has been exacerbated by a weak domestic reform agenda.
Since 2005, repeated shocks have contributed to reducing per capita income growth to little more than the rate of population growth. The 2011 household survey indicates that poverty has declined by only 1.8 percentage points to 46.7%, which is not significant from a statistical perspective. The Gini coefficient of inequality is estimated at 38; compared to the average of 42 in sub-Saharan Africa.
Senegal aspires to be a high middle income country by the next decade but has been stuck in a low-growth equilibrium since 2006. Senegal has not shared the rapid growth experienced by many other sub-Saharan African countries over the last decade. Compared with the average growth rate of 6% for the rest of sub-Saharan Africa (SSA), growth in Senegal averaged only 4% between 2000 and 2010, and only 3.3% since 2006.
Senegal’s economic performance was expected to improve in 2013, but a poor harvest and low production rates in mining and industry translated to GDP growth just slightly above 3.5% in 2012. GDP growth is projected at 4.6% in 2014, provided that significant investment reforms are implemented.
Over the medium term, Senegal is expected to regain economic momentum. Growth is expected to accelerate to reach at least 5% by 2015; achieving a similar rate of growth seen in 2003-07. Furthermore, Senegalese authorities have high expectations for growth in the coming years predicting rates of 6.7% in 2015 and 8% by 2017.
Poor governance has slowed progress in poverty reduction. With 47.6% of its population living in poverty, and 15% of that percentage living in extreme poverty; there has been no significant reduction in poverty between 2006 and 2011. Senegal's Human Development Index (HDI) is 0.459, slightly lower than sub-Saharan Africa’s average of 0.463 in 2012.
Furthermore, the private sector has been unable to stimulate the economy due to a weak investment climate, declining competitiveness, weak governance systems, and poor implementation follow up. In addition, natural disasters such as droughts and flooding have slowed growth and increased the vulnerability of the entire economy.
To exit the low equilibrium growth trap, the new government has developed an ambitious program to tackle these challenges. Addressing governance issues in a comprehensive manner will be critical for medium to long term growth. The Emerging Senegal Plan intends to reverse this downward trend by increasing the productivity of Senegal’s economy in the public and private sectors, both of which are underperforming compared to the past and to its peers.